Results Presentation & Investor Discussion Pack

Transcription

1 Results Presentation & Investor Discussion Pack For the full year ended 30 June 2017 Ian Narev, Chief Executive Officer Rob Jesudason, Chief Financial Officer Commonwealth Bank of Australia ACN August 2017

2 This result Jun 17 vs Jun 16 Statutory Profit ($m) 9, % Cash NPAT ($m) 9, % Cash Earnings per Share ($) % Dividend per Share ($) % ROE Cash 16.0% (from 16.5%) 2

3 Managing for today s environment Positive Jaws 3.8% FY17 vs FY16 Underlying 1 4.8% 2.4% 67% Strength 129% International 15.6% 10.1% APRA Returns +9 cents 16.0% 429 Income Expense Operating Perform. Deposit funding LCR CET1 ROE (cash) Dividend (cents) 1. In order to present an underlying view of the result, FY17 growth rates have been adjusted to exclude a $397m gain on sale of the Group s remaining investment in Visa Inc in Other banking income, and a $393m one-off expense for acceleration of amortisation on certain software assets. 3

4 Delivering for all our stakeholders 16.6 million customers Our Customers Our Shareholders ~800,000 shareholders $3.9bn in taxes Australia s largest taxpayer Our Community Our People 51,800 people in 11 countries 4

5 Delivering for our customers Satisfied Customers Dissatisfied Customers Retail MFI 1 Retail MFI 1 Excludes neutral responses 82.7% 9.8% Excludes neutral responses 70.5% Customer Satisfaction Rank Retail #1 Business = #1 Wealth #1 Internet #1 International #1 3.8% Jun 07 Jun 09 Jun 11 Jun 13 Jun 15 Jun Source: Roy Morgan. Excludes Can t say and N/A responses. Refer notes slide at back of this presentation for source information. Jun 07 Jun 09 Jun 11 Jun 13 Jun 15 Jun 17 5

6 Delivering for our customers FY17 1 NT $197bn in total new lending 330,000 new home loans $6bn in new loans to rural customers Insured more than 6m customers 2.7m new deposit accounts WA $15bn 36k $832m 513k 245k 136k SA $652m 1.6k $605k 37k 13k 9k $6bn 15k $526m 337k 100k 83k QLD NSW $21bn 53k $850m 914k 420k 217k 3 $53bn 92k $1.7bn 1.6m 877k 455k Helped 1.8m customers invest for the future 2 1. Group totals (Australia and Offshore) 2. Superannuation and managed funds 3. NSW includes ACT $2bn 5.6k $179m 145k 36k 20k VIC TAS $35bn 78k $1.4bn 1.2m 610k 288k 6

7 Delivering for our customers One CommBank Smarter analytics More leads 62,000 customer insights each week 43,000 video-conferencing referrals in FY17 Proprietary % of Total Flows Home lending (RBS) 62% More lenders 93 new branch lenders in FY17 54% 57% Insurance Branch investment 8% growth in home & contents insurance 1 Market 226 new format locations 48% 47% 46% 2 Smaller footprint 50% reduction in branch space Jun 16 Dec 16 Jun Policies with new home loans 2. Market as at Mar 17 7

8 Delivering for our customers - Financial Wellbeing Spend Tracker Savings Jar CommSec $10 Trade Developed in the CommBank lab with the help of our customers Tracking everyday expenses to make budgeting easier Watch your small change add up to bigger savings Making share investing accessible and affordable 8

9 Delivering for our shareholders Australian owned ~80% CBA Market Capitalisation 20% 80% Overseas investors Australians investing in funds Super funds for millions of Australians ~800,000 retail investors Jun 07 Jun 09 Jun 11 Jun 13 Jun 15 Jun 17 All figures are approximates 9

10 Delivering for our shareholders Our Owners Total Return (10yrs) +165% 1 $124,500 Average shareholding 850 shares $54,000 75% of profit returned to shareholders $47,000 $23,500 ~800,000 retail investors Millions more via super funds Jun 07 Share Price Increase Dividend Reinvestment Jun Return of 190% achieved when franking credits are included All figures are approximates 10

11 Delivering for our shareholders - Return on Equity % FY H17 2H17 11

12 Delivering for our community strength for all stakeholders Australia s largest taxpayer A responsible corporate citizen $3.9bn in taxes 1 in FY17 Equivalent to 260 schools; 6 hospitals Banking levy a further impost $272m invested in the community FY17 Almost 575,000 students in Start Smart Employer of choice for gender equality 1. Group total 12

13 Delivering for our community - strength Jun 07 Jun 17 CET1 389% Deposit funding 54% 67% Long term funding % 49% 60% 1 WAM new issuance 3.4 yrs 5.2 yrs Assets 122% Liquid assets $15bn $142bn 2 CET1 (APRA) 4.5% 10.1% Weighted Average Maturity of wholesale funding - includes debt with an original maturity or call date of greater than 12 months (including loan capital) 2. Assumes current LCR-type treatment of liquid assets 13

14 Key themes Continuing to leverage our customer franchise Strategic approach to costs and investment Adjusting for the environment Further strengthening our balance sheet 14

15 This result $m Jun 17 vs Jun 16 Operating Income 25, % Underlying 3.8% 1 Ex Visa $397m (1H17) Volume 6% Margin 3 bpts Operating Expense 11, % 2.4% Ex Amort. $393m (1H17) Investment* 35% (2H17) Operating Performance 14, % * expensed Loan Impairment 1,095 (12.8%) Benign conditions (15 bpts in FY17) Cash NPAT 9, % Tax rate 28.4% (FY16: 27.5%) 1. In order to present an underlying view of the result, FY17 growth rates have been adjusted to exclude a $397m gain on sale of the Group s remaining investment in Visa Inc in Other banking income, and a $393m one-off expense for acceleration of amortisation on certain software assets. 15

16 Underlying operating income up 3.8% $m +3.9% +5.4% +0.3% % 25, % 25, ,606 FY16 Net Interest Income Other Banking Income Funds & Insurance FY17 Underlying Visa FY17 16

17 Net Interest Income balancing volume and margin $m Margin (3 bpts) +5 bpts (4 bpts) +5.6% (334) Wholesale (4) (2 bpts) (167) (2 bpts) (189) +3.9% 17,600 16,935 Home Loans +6% Bus/Corp Loans +5% FY16 Volume Asset Pricing 1 Funding Costs NZ Capital/ Other FY17 1. Average interest earning assets 17

18 Margin flat this half or +2 bpts ex Treasury & Markets bpts +2 bpts Down 3 bpts over 12 months Group NIM ex Treasury & Markets FY15 FY16 FY17 1 (1) (1) 3 Deposits Business lending competition offsetting home loan repricing (2) Liquids (3) 211 1H17 Asset Pricing Funding Costs Portfolio Mix Capital & Other Sub Total Treasury & Markets 2H17 18

19 Other Banking Income 1 up 5.4% $m Volume growth +5.7% (24.5%) +12.1% +6.7% (134) +5.4% 5, Derivative Valuation Adj. Trading (ex DVA) +$85m ($23m) Lower sales 4,860 Higher credit card purchases Lower loyalty costs Volume driven deposit fee income Higher realised loss on NZ earnings hedge Lower revaluation gains on associates Non-core divestments FY16 Commissions Lending fees Trading income Other FY17 Underlying 1. In order to present an underlying view of the result, FY17 figures have been adjusted to exclude a $397m gain on sale of the Group s remaining investment in Visa Inc 19

20 Funds & Insurance income flat $m Avg FUA +6% Avg AUM +4% FX 3% Margins lower Funds Income Insurance Income +0.9% (1.1%) 69 (78) 18 2,811 2,820 Avg Inforce premiums +1% Increased income protection claims +0.3% FY16 Funds Income Underlying Insurance income Loss Recognition FY17 20

21 Managing costs whilst investing through the cycle $m FY17 vs FY16 $m 2H17 vs 1H17 10,434 Underlying +2.4% Positive jaws +6.2% 11,078 10, % Capitalised Expensed Investment Spend ($m) 5,284 5, (30) H % 2H % +34.7% FY16 Staff Tech. & Other Invest. Spend FY17 Underlying Acc. Amort. FY17 1H17 Underlying Staff Tech. & Other Invest. Spend 2H17 21

22 Divisional contributions FY17 vs FY16 Business Unit 1 % of Group NPAT Operating Income Operating Expenses Operating Performance LIE Cash NPAT Cost-to- Income FY17 RBS 50.2% 6.8% 2.3% 8.9% 5.4% 9.3% 30.8% BPB 16.6% 3.4% 4.2% 2.8% (58.0%) 7.7% 39.1% IB&M 13.2% (1.3%) (0.9%) (1.6%) (74.6%) 9.7% 37.6% Wealth 5.6% (2.5%) (1.7%) (4.6%) n/a (9.6%) 70.9% 2 ASB 9.5% 4.8% 0.8% 7.1% (46.9%) 13.0% 35.8% BWA 7.1% 0.7% 2.7% (0.7%) large (9.8%) 42.1% IFS 0.9% (0.8%) (12.8%) 44.1% (3.0%) 78.8% 69.4% 1. Excludes Corporate Centre and other 2. ASB result in NZD except for % of Group NPAT, which is in AUD 22

23 RBS Volume growth Margins Revenue up 6.8% Lower cost-to-income 12 months Home loan repricing and improved deposit margins in 2H17 partially offset by mix changes 2 9.3% 6.9% System 6.6% 1 6.7% 5.8% % 32.1% 30.8% 2.3% Home Loans Household Deposits 2H16 1H17 bpts 2H17 Rev. Exp. NPAT FY16 FY17 1. Adjusted for new market entrants/reporting changes 2. Lower growth in consumer finance products 23

24 Corporate Volume BPB - investment in the frontline IB&M low impairments 12 months BPB +5.8% IB&M flat 4.4% growth Margins 1 BPB IB&M Favourable deposit mix in 2H17 offsetting lending competition and shift to fee-based products % LIE down 74.6% 9.7% 3.3% 3.4% 4.2% (1.3%)(0.9%) System CBA ex Bankwest 2H16 1H17 bpts 2H17 Rev. Exp. NPAT Rev. Exp. NPAT 1. Combined Institutional Banking and Markets and Business and Private Banking 24

25 Wealth Funds Insurance Profit lower Offset by FX and lower margins mix and remediation Insurance Income $m (12.7%) General Insurance Net Event Claims $m +9.5% +4.2% % nd Half Includes higher loss recognition (+$78m) $bn 1 st Half 30 4 Rev. Exp. NPAT AUM FUA FY17 average balance FY16 FY17 FY16 FY17 (2.5%) (1.7%) (9.6%) 25

26 Impairment expense remains low 142 Corporate CBA Group (bpts) 1 Group Consumer FY09 Pro Forma FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY Cash LIE as a percentage of average GLAA (bpts). FY09 includes Bankwest on a pro-forma basis and is based on LIE for the year. Statutory LIE for FY10 48 bpts and FY13 21 bpts. 26

27 Consumer arrears 90+ days 1.20% 1.46% 1.41% Personal Loans Improving profile Remains elevated in WA 1.01% 0.99% 1.03% Credit Cards Seasonally higher 2 nd half 0.60% 0.50% 0.54% 0.49% Ex WA Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Home Loans Remains low Elevated in WA 2 (1.23%) 1 WA Home Loans Increased provisions Rigorous stress testing Credit policy tightening 1. Excludes Reverse Mortgage, Commonwealth Portfolio Loan (RBS only) and Residential Mortgage Group (RBS only) loans. 2. Excludes Line of Credit (Viridian LOC/Equity Line). 27

28 Total provisions of $3.7bn $m $bn Total Provisions Individual provisions Collective provisions IP ,818 2,747 CP Jun 16 Jun Overlay Bankwest Economic overlay unchanged Consumer 1,077 1, Corporate Jun 16 Jun 17 Jun 16 Jun 17 28

29 Further strengthening our balance sheet Deposit funding 67% NSFR 107% target range % (FY19) Wholesale funding tenor portfolio Wholesale funding tenor new 4.1 yrs 5.2 yrs Wholesale funding long term 60% LCR 129% target range % RWA optimisation +25 bpts RWA 1 contribution to CET1 2H17 CET1 (APRA) 10.1% APRA benchmark 10.5% by 1 Jan 2020 ROE (cash) 16.0% 1. Underlying - excluding changes to regulatory treatments 29

30 Funding and liquidity Deposit Funding Transaction account growth NSFR 107% Wholesale Funding Lengthening portfolio More long term funding LCR Liquid assets increased CLF reduced 66% 67% Portfolio (yrs) New Issuance (yrs) % 63% % 120% 58% Long Term 60% Long Term Jun 15 Jun 16 Jun 17 Jun 15 Jun 16 Jun 17 Jun 15 Jun 16 Jun 17 30

31 Optimising the balance sheet Corporate Credit RWAs 1 Movement ($bn) Group RWA 2 CET1 (APRA) impact (bpts) Negative to capital Positive to capital 25 Dec 15 Jun 16 Dec 16 Jun 17 Dec 15 Jun 16 Dec 16 Jun 17 (6) (11) (7.4) (57) 1. Includes Advance IRB Corporate, SME Corporate and Specialised lending, excludes FX 2. Underlying - excluding changes to regulatory treatments 31

32 CET1 of 10.1% organic growth +72 bpts Organic Growth +72 bpts (23) (67) (29) 9.9% 10.1% 10.5% 15 bpts remaining 1 (FY18) Includes (34 bpts) for higher mortgage risk weights per APRA (25.25%) 2 International 15.6% APRA benchmark Dec 16 Dec 16 APRA Interim Div. (Net of DRP) Cash NPAT Underlying RWA 3 Colonial Debt Model Changes/ Other Jun 17 1 Jan 2020 APRA 1. $350m (8 bpts) on 28 Aug 17; $315m (7 bpts) on 24 Jun Consistent with APRA s requirement for an average mortgage risk weighting across all IRB ADI s of at least 25 per cent 3. Underlying - excludes changes to regulatory treatments 32

33 Dividend cents per share Cash NPAT Payout Ratio Payout Ratio Net of DRP Up 2.1% % 74% % % 73% % 76% 75% 75% 77% 75% 76% 1 47% 52% 53% 61% 1 53% 55% 67% 1 62% 64% 55% 2 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 1. DRP Neutralised: 2H10, 1H13, 2H13 and 2H14 2. Assumes 2H17 DRP participation of 35% 33

34 Managing for unquestionably strong DRP 1.5% discount Organic generation Balance sheet optimisation (average 52 bpts pa last 5 years) 1 APRA 10.5% benchmark Non-recourse debt (-15 bpts in FY18 then completed) 1. Represents cash NPAT less dividends (net of DRP), and movements in RWA (excluding impact of regulatory change) 34

35 Summary Continuing to leverage our customer franchise Strategic approach to costs and investment Adjusting for the environment Further strengthening our balance sheet 35

36 Outlook Economic indicators generally positive Ongoing concerns about job security, wage growth and cost of living Need continuing broad productive business investment next wave post mining and construction investment For CBA, on-going focus on strength, customer engagement and technology, and more emphasis on productivity People the key 36

37 Group Overview

38 CBA overview Our people and customers 51,800 people serving 16.6m customers #1 in retail customer satisfaction =#1 in business customer satisfaction #1 market share in home lending #1 market share in household deposits Technology and innovation 1 st Australian bank to go real-time, 24x7 15m customers using real time banking Digital >50% transactions by value #1 free financial app in Australia #1 internet customer satisfaction Financial strength ~800,000 shareholders Total assets of $976bn CET1 (APRA) 10.1% Underlying 1 cost-to-income 41.8% Deposit funding 67% Aust. NZ Other Total Online Customers 6.2 million Market Capitalisation #1 Customers 13.8m 2.3m 0.5m 16.6m Staff 41.6k 5.7k 4.5k 51.8k Branches 1, ,350 Customer Sat.- Internet #1 Logons per week CommBank app and Netbank Online account opening Savings and transaction accounts 40 million <3 minutes CET1 - APRA 10.1% CET1 - International 15.6% Total Assets $976bn ATMs 4, ,991 CommBank app mobile users 4.4 million Credit Ratings AA-/Aa3/AA- 1. In order to present an underlying view of the result, FY17 growth rates have been adjusted to exclude a $397m gain on sale of the Group s remaining investment in Visa Inc in Other banking income, and a $393m one-off expense for acceleration of amortisation on certain software assets. Refer to the slide at the back of this presentation for source information 38

39 Customer focus Our Vision Our Values Strategic Capabilities To excel at securing and enhancing the financial Integrity Accountability People Technology wellbeing of Collaboration people, businesses and Excellence Productivity Strength communities Service Our Growth Opportunities One CommBank Continued growth in business and institutional banking Disciplined capability-led growth outside Australia TSR Outperformance 39

40 Delivering for customers Retail Customer Satisfaction % Satisfied ('Very Satisfied' or 'Fairly Satisfied') 82.7% Customer Satisfaction Rankings Business 1 = #1 Wealth #1 70.5% CBA Peers Jun 07 Jun 17 IFS Internet #1 #1 1. Equal first for micro, small and medium business segments, outright first for large business segment. Outright or equal first for large business segment for last 4 years. Refer notes slide at back of this presentation for source information. 40

41 MFI Share Our customer franchise Customer lifecycle by age 46.5% 44.4% Serving 16.6 million customers 41.3% Jun 17 Jun % CBA Peer 3 Peer 1 Peer 2 Incl. Bankwest 18.8% 13.8% 11.9% 30.0% 28.5% 27.4% MFI for 1 in 3 Australians Leading market shares in home lending 25.2% and household deposits 28.8% Highest share-of-wallet amongst peer group (3.07 products per customer) Refer notes slide at back of this presentation for source information 41

42 Customer needs met Overall Share of Product 3.07 Wealth share of product 11.0% 9.4% 8.2% 8.0% 8.23 Share of product CBA Peer 3 Peer 1 Peer 2 Wealth % 2.15 CBA Peers Lending & Cards Deposits % 67.7% Jun 07 Jun 17 Products held at CBA Products held anywhere Refer notes slide at back of this presentation for source information. Individual products may not add up to the overall totals due to rounding. 42

43 Delivering for customers business Customer Satisfaction (DBM) Customer Satisfaction (DBM, Large) Micro = #1 Small = #1 4 years* #1 Medium = #1 Large #1 CBA Peers Jun 14 Jun 17 * Outright or equal 1 st Refer notes slide at back of this presentation for source information 43

44 97% 95% 93% 91% 89% 87% 85% Australia s leading technology bank More satisfied customers Leader in real-time Forefront of innovation Internet Banking CBA Peers 94.0% Group transaction balances +38.0% +12.7% Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 FY15 FY16 FY million active online customers Digital >50% transactions by value #1 free financial app in Australia #1 internet customer satisfaction #1 on social media #1 online banking (Canstar) 8yrs 1 st Australian bank real-time, 24x7 Real-time since 2010, used by 15 million customers Originate and transact in real time: anywhere, anytime, any device Strong growth driver - transactions Innovating across our business Collaborating with industry and the broader community on emerging technologies quantum computing, blockchain, robotics etc Refer slide at back of this presentation for source information 44

45 Innovating in Business business insights Providing business clients with customised insights to enhance their financial success. Daily IQ 2.0 enables clients to: identify opportunities to optimise their cash flow compare their key performance metrics to their industry identify business risks discover more about their customers, including demographics, customer loyalty and spending patterns MySkin Laser Clinics Busiest Times data has assisted with optimising resources across all stores, making considerable savings to the bottom line. Daily IQ gave us the confidence to open a store in a new location knowing we already had clientele in the area. Over 230,000 NetBank and CommBiz users have 24/7 access to insights about their business through Daily IQ 45

46 Business & Private Banking Investing in people Investing in technology Investing in products 100 new business banking staff in key growth locations across Agri, Health, Professional Services and Not-for-Profit sectors 250% increase in client contact volume over last 6 months Best-in-class sales tools and training programs >80% of BBL 1 now digitally enabled via NetBank and CommBiz >85% of BBL re-draws completed online MRL 2 now digitally enabled via CommBiz (including multiple self-service capabilities) SmartSign 80% of Asset Finance customers can sign documents online and be funded within 2 hours 1. BetterBusiness Loans 2. Market Rate Loans 46

47 Innovating in Albert Number of devices 98% 85,000+ devices 64% new merchants to CBA 55, , , , ,000+ Jun 16 Sep 16 Dec 16 Mar 17 Jun apps in total 18 new apps in FY17 47

48 Innovating in retail Youth app A fun and safe way to help younger customers to save and spend responsibly View accounts & balances Set savings goals Set and complete jobs View School Banking tokens 22,222 downloads and 7,764 registrations since launch Apr 17 48

49 Innovating in Wealth - simplicity Retail Life Insurance CBA Retirement Calculator CFS Pension Statements Enhancing the underwriting process by offering customers tele-interviewing to obtain cover in a single transaction over the phone Customers can now estimate and better understand their retirement income and receive tips on how to make it grow. Over 47,500 visitors since launch. New online statements provide more personalised content with suggested actions, delivered with increased online security and accessible via any device 49

50 Innovating in IFS Money Transfer South Africa Indonesia Key Partnerships 10 year partnership 1,000 locations 10 million loyalty customers 10,000 till points On the spot account creation via 710 self-service kiosks (Pick n Pay and Boxer stores) Launched May months from concept to rollout 4 minutes to on-board new customers $4 on-boarding cost per customer African Rainbow Capital Broad based local ownership 10% future shareholder in CBA South Africa On the spot account creation, card issuance Identity/authentication - local ID card reader Debit card activation through attached POS 50

51 Collaborating on emerging technologies Developed a Quantum computer simulator to create quantum software before the hardware has been built First to enable Mobile to mobile payments between Australia and the UK, in partnership with Barclays Collaborating with Stockland, University of Technology Sydney and the Australian Technology Network of Universities research into Social robotics Payment partnerships Australia s first MoU with Alipay to enhance the payment experience for Chinese tourists Blockchain trade World first global trade transaction between two independent banks using blockchain Card innovation Pilot use of a credit card for travel on Transport for NSW services Cryptobond World first government bond issued using blockchain with Queensland Treasury Corporation 51

52 Delivering for customers real time, digital banking Digital - transactions Digital - sales Repositioning branches 54% of all transactions by value now digital 26% of retail product sales now digital 50% smaller footprint 226 locations Digital transactions by value 54% Digital contribution to total sales 1 26% 100m Branch deposits & withdrawals (m) 47% 11% 50m Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun Real time banking originate and transact in real time anytime, anywhere, any device 1. Quality new accounts (QNA) for key products originated end-to-end including deposits, credit cards, home loans, personal loans, insurance and business accounts. QNA demonstrates certain types of transactional activity such as deposits, loan repayment deductions etc. 52

53 The digital revolution customer take-up CommBank app users 1 Monthly unique customers (m) CommBank app CommBank app Logons per week (m) Transactions per week ($bn) Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Jun 14Dec 14Jun 15Dec 15Jun 16Dec 16Jun 17 Data refers to CommBank app mobile users 1. Monthly unique users of the CommBank app, defined as anyone who logs into the app for the month 2. Includes BPAY 53

54 The digital revolution transaction migration 600k A better bill experience New bill registrations (cumulative) 600% uplift Accounts with e-statements Total Accounts with e-statements (m) k k 300k k 100k Launch of Better Bill Experience 0k FY16 FY Jun 14 Jun 15 Jun 16 Jun 17 Photo-a-bill launched May 2016 Pre-populate BPay Bills sent directly to app or NetBank 1. Credit Card, transaction and savings accounts 2. Credit card, transaction, savings, personal loans, home loans 54

55 The digital revolution customer experience & security Cardless Cash Tap & Pay Lock, Block & Limit Cumulative volume of unique transactions (m) 1 Volume of transactions per quarter (m) 2 Number of accounts enrolled (k) Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun Launched April Volume of transactions using Tap & Pay (HCE only) 3. Number of unique accounts that have enrolled for Lock, Block and Limit (excl. temp. lock) 55

56 CBA in Asia and South Africa Asia China Bank of Hangzhou (18%): 196 branches Qilu Bank (20%): 128 branches County Banking (Henan & Hebei) 1 : - 15 branches 100% holding, 80% holding) - 8 sub-branches 100% holding, 80% holding) CBA Beijing, Shanghai and Hong Kong branches BoCommLife (37.5%): operating in 12 provinces First State Cinda JV (46%) and First State Investments Hong Kong Colonial Mutual Group Beijing Rep Office Indonesia PT Bank Commonwealth (99%): 55 branches and 144 ATMs PT Commonwealth Life (80%): 25 life offices PT First State Investments Vietnam Vietnam International Bank (20%): 156 branches and 400 ATMs Hanoi Representative Office South Africa Map not to scale 1. On 27 July 2017, CBA entered into an agreement to transfer CBA s County Bank ownership in China to Qilu Bank, subject to regulatory approvals Singapore CBA branch First State Investments South Africa CBSA: 710 kiosks Japan Tokyo CBA branch First State Investments 56

57 Corporate responsibility Improving our customers experience Empowering & supporting our communities A healthy & engaged workforce Environmental stewardship Building a strong and responsible business Independent Customer Advocate appointed Community Council established Financial wellbeing initiatives Developed quantum computer simulator Business Insights Report launched Start Smart classes to 574k students 12 Teaching Fellowships awarded Youth App JumpStart app for Indigenous businesses Financial Inclusion Action Plan MoneyTransfer kiosks 44% women in Manager and above roles 0.8% Indigenous workforce Whistleblower Protection Officer appointed 69% of people working flexibly Launched Thrive portal $1.02 billion climate bonds arranged 48.5% reduction in direct emissions since branches with solar panels Climate position statement developed Colonial First State signatory to UN PRI 2,768 employees trained in ESG 1 $1.5 million spend with 17 Indigenous suppliers Updated Supplier Code of Conduct Slavery and Human Trafficking Statement Tax Transparency Code 1. Environment, Social and Governance For further details, please refer to: 57

58 Supporting the transition to a low carbon economy At A$650 million, our climate bond is Australia s largest $A climate bond issued by a bank LOW CARBON BUILDINGS ENERGY WIND POWER LOW CARBON TRANSPORT Our lending exposure to renewable energy generation has grown to $2.8 billion Strengthened our ESG Lending Assessment Tool which includes a compulsory ESG risk assessment process for all loans in IB&M and larger loans in BPB, Bankwest and ASB $1.4 billion FY15 $2.2 billion FY16 $2.8 billion FY17 Released the third report on the emissions intensity of our business lending portfolio 0.29 kgco 2 -e/aud for FY16 Further details, and the methodology for the emissions intensity of our business lending portfolio, are available at: FY14 FY15 FY16 kgco 2 -e/aud of expenditure 58

59 Corporate responsibility performance data FY17 FY16 FY15 Employees completing ESG training 2,768 1,786 - Environment Renewable energy lending exposure ($bn) Business lending emissions intensity (kgco 2 -e/aud) Dependent on client FY17 data Total greenhouse gas emissions (Group) (tco 2 -e) 204, , ,276 Emissions per FTE (Australia) Scope (tco 2 -e) Employee Engagement Index (CBA) (%) Social Women in Manager and above roles (%) Lost Time Injury Frequency Rate (LTIFR) Total community investment ($m) Training hours per employee Governance Female directors on Board (%) SpeakUP Program cases (#) Whistleblower cases (#) Training completion rates on Our Commitments (%) CFSGAM: Sharing our interactive case study map, live proxy voting and climate change information with our customers via a digital platform 1. Our finance emissions method relies on client-specific data which limits the timing we can undertake and release the analysis. 2. In 2017 for the first time we have included data centres outside of our operational control. A full list of non-financial reporting metrics is available in the 2017 Corporate Responsibility Report, available at: 59

60 Financials

61 CBA in FY17 Strength and Returns Cash NPAT up 4.6% to $9,881m Cost-to-Income improved to 41.8% 1 Delivering for all our Stakeholders Australia s largest taxpayer - $3.9bn 2 in FY17 Serving 16.6 million customers CET1 (APRA) of 10.1% MFI for one in three Australians International CET1 of 15.6% #1 in retail customer satisfaction Cash Return on Equity of 16.0% Employing 51,800 people $4.29 dividend per share, fully franked 75% of profits returned to 800,000 shareholders 1. In order to present an underlying view of the result, FY17 growth rates have been adjusted to exclude a $397m gain on sale of the Group s remaining investment in Visa Inc in Other banking income, and a $393m one-off expense for acceleration of amortisation on certain software assets. 2. Group total 61

62 FY17 - result overview 1 Financial Statutory NPAT ($m) 9, % Cash earnings ($m) 9, % ROE % (cash) 16.0 (50) bpts EPS $ (cash) cents DPS $ cents Underlying 2 C:I 41.8% (60) bpts NIM (%) 2.11 (3) bpts Operating Income ($m) 25, % Expenses ($m) 11, % LIE to GLAA (bpts) 15 (4) bpts Balance Sheet, Capital & Funding Capital CET1 (Int l) % 120 bpts Capital CET1 (APRA) 10.1% (50) bpts Total assets ($bn) % Total liabilities ($bn) % Average FUA ($bn) % Deposit funding 67% 1% LT wholesale funding WAM 4.1 yrs - Liquidity coverage ratio 129% 9% Leverage ratio (APRA) 5.1% 10 bpts Net stable funding ratio 107% n/a Credit Ratings 4 AA-/Aa3/AA- Refer footnote 4 1. All movements on prior comparative period unless stated 2. In order to present an underlying view of the result, FY17 growth rates have been adjusted to exclude a $397m gain on sale of the Group s remaining investment in Visa Inc in Other banking income, and a $393m one-off expense for acceleration of amortisation on certain software assets. 3. Internationally comparable capital - refer glossary for definition 4. S&P, Moody s and Fitch. S&P put major Australian Banks on Outlook Negative 7 Jul 16. Moody s lowered the rating on 19 Jun 17, outlook Stable. Fitch updated the outlook on the bank sector to Negative on 2 Dec 16 though individual CBA issuer rating remained Stable. 62

63 Result overview Cash Earnings ($m) +4.6% NIM Underlying 1 C:I Cash ROE (3) bpts (60) bpts (50) bpts 9,445 9, % 16.5% 16.0% 41.8% FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 Cash EPS (cents) +3.5% DPS (cents) +9 cents CET1 (APRA) CET1 (International) 2 (50) bpts +120 bpts % 10.1% 14.4% 15.6% FY16 FY17 FY16 FY17 FY16 FY17 FY16 FY17 1. In order to present an underlying view of the result, FY17 growth rates have been adjusted to exclude a $397m gain on sale of the Group s remaining investment in Visa Inc in Other banking income, and a $393m one-off expense for acceleration of amortisation on certain software assets. 2. Internationally comparable capital - refer glossary for definition 63

64 Statutory NPAT up 7.6% $m Jun 17 Jun 16 Cash NPAT 9,881 9, % Hedging and IFRS volatility 1 73 (199) NZ revenue hedge Bankwest non-cash items (3) (27) Treasury shares valuation adjustment (23) 4 Total non-cash items 47 (222) Statutory NPAT 9,928 9, % 1. Unrealised accounting gains and losses arising from the application of AASB 139 Financial Instruments: Recognition and Measurement 64

65 Banking levy 1 Total liabilities Exclusions: Financial Claims Scheme deposits Derivatives Tier 1 capital securities Exchange Settlement Account Adjusted liabilities $m 898,722 (238,500) (32,094) (8,160) (5,161) 614,807 Applicable to ADIs with liabilities >A$100bn, i.e. major banks and Macquarie Bank Effective from 1 Jul 17 with the first report due Feb 18 & first payment due Mar 18 Levy is based on 0.06% per annum of Total Adjusted Liabilities of the CBA parent $614,807 x 0.06% = $369m (pre-tax) = $258m (post tax) 1. Revised estimate - illustrative annualised cost of Australian Bank Levy based on 30 June 2017 balance sheet and spot balances 65

66 Corporate tax rates by country of CBA s key operations CBA Group Effective tax rate 28.4% 30.3% after Banking Levy % 30.0% 28.0% 25.0% 19.0% 17.0% 16.5% USA Australia New Zealand Indonesia United Kingdom Singapore Hong Kong 1. The illustrative estimated annualised cost of the new Australian bank levy based on 30 June 2017 balance sheet is $258m after tax. Treated as a tax (and not an expense) this increases the effective tax rate from 28.4% to 30.3%. 66

67 Divisional contributions $m Operating Performance FY17 vs FY16 Operating Income less Operating Expenses $m Cash NPAT FY17 vs FY16 RBS % RBS % BPB % BPB % IB&M (29) (1.6%) IB&M % WM (33) (4.6%) WM (59) (9.6%) ASB (NZD) % ASB (NZD) % BWA (8) (0.7%) BWA (76) (9.8%) IFS % IFS % 67

68 Our total income benefiting all our stakeholders $26.0bn Salaries Expenses Tax LIE Reinvested for Growth Dividends to Shareholders $6.3bn $4.8bn $3.9bn $1.1bn $2.5bn $7.4bn Total Income 51,800 employees globally, 41,600 in Australia Including products and services from >5,000 small and medium-sized businesses Australia s largest tax payer Supporting Australia 800,000 shareholders + millions more via Super 68

69 Total income drivers $m 24,747 2, , % Visa Investment Experience 26,005 2, ,123 16,935 17,600 Funds & Insurance 0.3% Average FUA 5.6% Insurance income (1.1%) 1 Other Banking Income 5.4% Derivative Valuation Adjustment (DVA) +$85m Trading (ex DVA) (2.0%) Commissions 12.1% FY16 FY17 Net Interest Income 3.9% Volume 5.6% Margin (3) bpts 1. In order to present an underlying view of the result, FY17 growth rates have been adjusted to exclude a $397m gain on sale of the Group s remaining investment in Visa Inc. 69

70 Over 12 months, Group NIM down 3 bpts bpts (4) Wholesale (4) (2) (2) 211 FY16 Asset pricing Funding costs NZ Capital & Other FY17 70

71 Volume growth 1 35% 30% 25% 20% 15% 10% Household Deposits Home Lending Business Lending 2 Market share 1 CBA Peers Jun 07 Jun % 23.2% 14.2% 13.5% 26% 21% 16% 11% Market share 1 CBA Peers Jun 07 Jun % 23.0% 14.8% 14.5% ex Bankwest 6.6% 6.7% 3 6.7% 5.3% 1.4% 0.8% 3.4% 3.1% 4.4% 3.3% 1.2% 0.3% 12 Months Jun 17 6 Months Jun Months Jun 17 6 Months Jun Months Jun 17 6 Months Jun 17 System CBA 1. Source RBA/APRA/RBNZ. CBA includes BWA except Business Lending. 2. Domestic Lending balance growth (BPB & IB&M ex CMPF). Source RBA. 3. Adjusted for new market entrants/reporting changes 71

72 Market share 1 % Jun 17 Dec 16 Jun 16 Home loans Credit cards RBA Other household lending Household deposits Business lending RBA Business lending APRA Business deposits APRA Asset finance Equities trading Australian Retail administrator view FirstChoice Platform Australia life insurance (total risk) Australia life insurance (individual risk) NZ home loans n/a n/a NZ customer deposits n/a n/a NZ business lending n/a n/a NZ retail FUA NZ annual inforce premiums Prior periods have been restated in line with market updates 2. Adjusted for new market entrants/reporting changes 3. As at 31 May Includes personal loans, margin loans and other forms of lending to individuals 5. As at 31 Mar RBNZ published data collection has changed based on a new collection template implemented with all NZ banks. The RBNZ has not republished the equivalent metrics on a restated basis for Jun 16. The restated Dec 16 metrics will be presented in Dec 17 allowing for comparatives on a twelve month basis. 72

73 Other banking income higher Other banking income $m Trading income $m Other Trading 4,811 4, ,039 1,087 5, ,149 Visa 1, , , Derivative Valuation Adj. Trading Lending fees 1,005 1,010 1,078 Commissions 2,209 2,215 2, Sales FY15 FY16 FY17 (39) (74) FY15 FY16 FY17 73

74 Strategic approach to costs: positive jaws + continuing to invest Operating Performance 8.7% Revenue Growth Expense Growth 7.3% 5.4% 5.5% 6.0% 5.4% 5.3% 5.3% Underlying 1 4.8% 4.3% 3.8% 2.4% FY14 FY15 FY16 FY17 1. In order to present an underlying view of the result, FY17 growth rates have been adjusted to exclude a $397m gain on sale of the Group s remaining investment in Visa Inc in Other banking income, and a $393m one-off expense for acceleration of amortisation on certain software assets. 74

75 Strategic approach to costs: positive jaws + continuing to invest Cost to Income (%) Gross investment spend $m Investment spend % of total 42.8% 1,246 1,373 1,279 12% 12% 10% Branches & Other 42.4% nd Half 30% 37% 37% Risk & Compliance underlying % st Half 58% 51% 53% Productivity & Growth FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 Expensed: In order to present an underlying view of the result, FY17 growth rates have been adjusted to exclude a $397m gain on sale of the Group s remaining investment in Visa Inc in Other banking income, and a $393m one-off expense for acceleration of amortisation on certain software assets. 75

76 Increased risk & compliance spend ($m) Cumulative 1,939 2, Spend over 5 years 3,645 FY13 FY14 FY15 FY16 FY17 FY13-17 CAGR 29% Examples AML (Anti-Money Laundering) FATCA (Foreign Account Tax Compliance Act) Stronger Super Future Of Financial Advice Common Reporting Standard AML Invested more than $230m in our Anti-Money Laundering compliance and reporting processes and systems Annually, approximately 4 million transactions 2 reported to AUSTRAC (Australian Transaction Reports and Analysis Centre) CBA employees required to complete mandatory training on the Anti-Money Laundering and Counter-Terrorism Financing Act 1. Comparative information for FY15 and FY16 has been restated to conform to presentation in the current period. 2. Includes International Funds Transfer Instructions (IFTIs), Threshold Transaction Reports (TTRs) and Suspicious Matter Reports (SMRs) 76

77 Credit Quality & Risk Management

78 CBA home loan portfolio - overview and historical losses 2.5% 2.0% 1.5% 1.0% 0.5% Losses to average gross loans CBA Home Loans 1 Group Total Loan Losses 2 FY17 losses of 3 bpts Portfolio dynamic LVR 3 of 50% Maximum LVR of 95% all loans 4 Limited low doc lending (with LMI) 5 Servicing buffer +2.25% or min floor 6 Full recourse lending Regular stress testing 0.0% CBA Home Loans represents Australian Home Loans and includes Bankwest from Group includes all losses for the Group (CBA/Bankwest/ASB). Losses includes write-offs from collective and individual provisions, less recoveries. 3. LVR defined as current balance/current valuation. 4. For Bankwest, maximum LVR excludes any capitalised mortgage insurance. 5. For low doc lending, documentation is required, including Business Activity Statements. 6. Higher of customer rate plus 2.25% or minimum floor rate. 78

79 Home loan portfolio Australia Portfolio 1 Jun 16 Dec 16 Jun 17 Total Balances - Spot ($bn) Total Balances - Average ($bn) Total Accounts (m) Variable Rate (%) Owner Occupied (%) Investment (%) Line of Credit (%) Proprietary (%) Broker (%) Interest Only (%) Lenders Mortgage Insurance (%) Low Doc (%) Mortgagee In Possession (bpts) Annualised Loss Rate (bpts) Portfolio Dynamic LVR (%) Customers in Advance (%) Payments in Advance incl. offset New Business 1 Jun 16 Dec 16 Jun 17 Total Funding ($bn) Average Funding Size ($ 000) Serviceability Buffer (%) Variable Rate (%) Owner Occupied (%) Investment (%) Line of Credit (%) Proprietary (%) Broker (%) Interest Only (%) 2, Lenders Mortgage Insurance (%) Low Doc (%) All portfolio and new business metrics are based on balances and fundings respectively, unless stated otherwise. All new business metrics are based on 6 months to June and December. 2. Excludes Line of Credit (Viridian LOC/Equity Line). 3. LVR defined as current balance/current valuation. 4. Any amount ahead of monthly minimum repayment; includes offset facilities. 5. Average number of monthly payments ahead of scheduled repayments. 6. Average Funding Size defined as funded amount / number of funded accounts. 7. Serviceability test based on the higher of the customer rate plus a 2.25% interest rate buffer or a minimum floor rate. 8. APRA benchmark reporting on a different basis using limits and includes all construction loans (Jul 17: <30%). 79

80 Home loan portfolio RBS Portfolio 1 Jun 16 Dec 16 Jun 17 Total Balances - Spot ($bn) Total Balances - Average ($bn) Total Accounts (m) Variable Rate (%) Owner Occupied (%) Investment (%) Line of Credit (%) Proprietary (%) Broker (%) Interest Only (%) Lenders Mortgage Insurance (%) Low Deposit Premium (%) Low Doc (%) Mortgagee In Possession (bpts) Annualised Loss Rate (bpts) Portfolio Dynamic LVR (%) Customers in Advance (%) Payments in Advance incl. offset New Business 1 Jun 16 Dec 16 Jun 17 Total Funding ($bn) Average Funding Size ($ 000) Serviceability Buffer (%) Variable Rate (%) Owner Occupied (%) Investment (%) Line of Credit (%) Proprietary (%) Broker (%) Interest Only (%) Lenders Mortgage Insurance (%) Low Deposit Premium (%) Low Doc (%) Includes retail mortgages originated outside of RBS. All portfolio and new business metrics are based on balances and fundings respectively, unless stated otherwise. New business metrics are based on 6 months to June and December. 2. Excludes Line of Credit (Viridian LOC). 3. LVR defined as current balance/current valuation. 4. Any amount ahead of monthly minimum repayment; includes offset facilities. 5. Average number of payments ahead of scheduled repayments. 6. Average Funding Size defined as funded amount / number of funded accounts. 7. Serviceability test based on the higher of the customer rate plus a 2.25% interest rate buffer or a minimum floor rate. 80

81 Australian home loans portfolio growth profile $bn Balance Growth State Profile FY17 FY17 Balance Growth % of Portfolio (92) (16) % 8.1% 6% 16% 18% 26% 34% 6.4% 2.0% 2.6% Jun 16 New Fundings Redraw & Interest Repayments / Other External Refinance Jun 17 NSW/ACT VIC/TAS QLD WA SA/NT Includes RBS and Bankwest. State Profile exclude Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans (RBS only) and Residential Mortgage Group (RBS only) loans. State Profile determined by location of the underlying security 81

82 RBS Payments in advance 1 Payments in advance (% of accounts) 6% Residual: have less than 1 month repayment buffer 9% Structural: loans that structurally restrict payments in advance e.g. fixed rate loans etc 29% 4% New Accounts: loans that are less than one year on book 7% 7% 8% 13% 16% Investment loans: incentivised to keep interest payments high for negative gearing/tax purposes > 2 years 1-2 years 6-12 months 3-6 months 1-3 months < 1 month 2 1. Excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans and Residential Mortgage Group loans; Includes offset facilities; Loans in arrears (1%) are excluded. 2. Consists of loans that are up-to-date (23%) and less than one month in advance (12%). 82

83 % Serviceability Across the system, whilst gross household debt has risen, net debt has remained stable Source: RBA % of annual household disposable income Debt Net debt* Currency & deposits * Total debt less currency & deposits 0 Sep 88 Sep 94 Sep 00 Sep 06 Sep 12 Mar 17 Taking into account the growth in mortgage offset/equity accounts, net debt has been stable for the past decade, and below the 2006 peak 1. Australian Home Loans. 2. SVR + Buffer excludes discounts. Serviceability Income Expenses Interest rate buffer Interest only (IO) Key policy changes Key Origination Requirements 1 80% cap on less certain income sources (e.g. rent, bonuses etc.) Limits on investor income allowances e.g. RBS restrict the use of negative gearing where LVR>90% Higher of declared expenses or HEM adjusted by income Buffer applied to existing mortgage repayments Loan serviceability buffer of 2.25% above the customer rate, with a minimum floor rate (RBS: 7.25% pa, Bankwest: 7.35%) IO loans assessed on principal and interest basis over the residual term of the loan Postcode based risk settings Maximum LVR of 80% for IO loans 10% 9% 8% 7% 6% 5% 4% 3% Interest rate buffers built into 2 serviceability tests RBS SVR (OO P&I) SVR + Buffer 2.25% 2% Jun 14 Jun 15 Jun 16 Jun 17 Customer serviceability tests include an interest rate buffer of 2.25% above the customer rate, with a minimum floor rate of 7.25% 83

84 Interest only 1.00% 0.80% 0.60% 0.40% 0.20% Arrears 90+ days Portfolio Interest Only 0.00% Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Payments in Advance (Jun 17) Portfolio Interest Only Interest Only Owner Occupied Maximum LVR of 80% at origination Assessed on a P&I basis over the residual term of the loan Borrower profile skewed toward higher income bands and investors Lower arrears than overall portfolio Pricing and policy measures taken to reduce lending proportions below APRA s 30% threshold Excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans and Residential Mortgage Group loans. Payments in Advance defined as the average number of monthly payments ahead of scheduled repayments. 84

85 Investor lending Growth 1 Income Profile 2 Arrears 2 16% Year on year (%) 50% Applicant Gross Income Band Fundings (6 Months to Jun 17) 1.00% 90+ days 45% 12% 40% Owner Occupied 0.80% 8% 7.5% 6.3% 35% 30% 25% Investment Loans 0.60% 4% 5.7% 20% 0.40% 0% 5.1% 15% 10% 0.20% Owner Occupied Portfolio Investment Loans -4% Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 CBA Owner Occupied System Owner Occupied CBA Investment Loans System Investment Loans 5% 0% 0k to 75k 75k to 100k 100k to 125k 125k to 150k 150k to 200k to > 500k 200k 500k 0.00% Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Investment home loan growth running below APRA 10% cap Investor borrowers skewed to higher income bands Investment loan arrears below that of overall portfolio 1. Based on APRA Banking Statistics; includes Line of Credit. 2. Australian Home Loans. Includes RBS and Bankwest except where noted. Income Bands, Arrears and Profile: excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loan (RBS only) and Residential Mortgage Group (RBS only) loans except where noted. Fundings based on dollars. 85

86 CBA home loan portfolio arrears Arrears by BU Group 90+ days 1 Arrears by Year Group 90+ days 1 Arrears by Vintage Australia days 1.8% 1.8% 2.0% Group Bankwest RBS ASB % 1.2% 1.2% FY07-FY10 1.0% FY13 FY12 0.6% 0.6% FY14 FY11 0.5% FY15 Excluding WA FY16 0.0% Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun % Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 0.0% FY Months on Book 1. Excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loan (RBS only) and Residential Mortgage Group (RBS only) loans. 2. Bankwest included from FY08. 86

87 Portfolio arrears Australian Home Loans by State Home loan arrears Western Australia 1.50% 90+ days % of Portfolio Rigorous stress testing 1.00% 16% 34% 18% 6% 26% WA QLD Credit policy tightening eg LVR caps, insurance requirements SA/NT Tailored treatments by segment National 0.50% National (ex WA) VIC/TAS Early engagement with IHL accounts secured by multiple properties 0.00% Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 NSW/ACT Increased provisions Includes RBS and Bankwest. Arrears exclude Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans (RBS only) and Residential Mortgage Group (RBS only) loans. 87

88 WA economic overview Unemployment Employment Jobs by Sector Unemployment rates (%) 7.0 AUSTRALIA 5.3 WA 3.7 Source: ABS 2.0 Jan 08 Jan 10 Jan 12 Jan 14 Jan Source: ABS WA Employment Growth (annual % change) Part-time Full-time -6 Jun 17 Jan 10 Jan 12 Jan 14 Jan 16 Jun 17 Health Construct Retail Education Mining Prof serv Accomm Gov admin Manufact Transp Pers Admin Wholesale Fin & insur Agri Cult Rental EGW Communic WA Jobs by sector (% of total) Source: ABS The unemployment rate has peaked and is now in line with the national average. Full time employment growth has lifted. A sign of an improving labour market. The WA economy is more diversified than is generally appreciated. Health, construction, retail and education sectors are the biggest employers. 88

89 % of Total Portfolio Accounts Loan to Value Ratio (LVR) and portfolio insurance Home Loan Dynamic LVR 1 Portfolio Insurance Profile 2 % of Australian Home Loan portfolio 70% 60% 50% 40% Average Dynamic LVR Jun 16 50% Dec 16 51% Jun 17 50% Insurance with Genworth or QBE for higher risk loans above 80% LVR 22% 5% 73% New excess of loss re-insurance 30% 20% 10% LMI Genworth / QBE 0% 0% to 60% 60% to 80% 80% to 90% 90% to 95% >95% Insurance not required Low Deposit Premium Segment Insurance not required Dynamic LVR Band 1. Australian Home Loans. Dynamic LVR is current balance / current valuation. 2. Excludes Line of Credit, Reverse Mortgage, Commonwealth Portfolio Loans and Residential Mortgage Group loans. 89

90 Home loans stress test Australia Assumptions and Outcomes Assumptions (%) Base Year 1 Year 2 Year 3 Cash Rate Unemployment Labour Force Under Utilisation Cumulative reduction in house prices n/a LMI claim payout ratio n/a 50% 50% 50% Outcomes ($m) Total Year 1 Year 2 Year 3 Stressed Losses 3, ,224 2,036 Insured Losses 1, Net Losses 2, ,520 Net Losses (bpts) PD % n/a Summary 3 year scenario of cumulative 31% house price decline, peak 11% unemployment and a reduction in the cash rate to 0.5%. Total net losses after LMI recoveries over 3 years of $2.9bn. Higher losses from assuming lower recoveries from LMI. Stress Test loss outcomes updated to take into account potential stress from higher risk segments such as investor, interest only loans, Western Australia and mining towns. House prices and PDs are stressed at regional level. One of multiple regular stress tests undertaken as part of Risk Management and regulatory activities. Results based on December 2016 data. Labour Force Under Utilisation is the unemployment and underemployment rate combined. Total net losses (bpts) is calculated as total net losses divided by average exposure over the three years. 90

91 Consumer arrears 1.8% Credit Cards Group 90+ days 1.8% Personal Loans Group 90+ days 1.2% 0.6% Group Bankwest RBS ASB 1.2% 0.6% 0.0% Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun % Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun % Credit Cards Group 30+ days 4.0% Personal Loans Group 30+ days 2.8% 2.6% 2.4% 2.2% % 3.0% 2.5% 2.0% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2.0% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Consumer represents Retail Banking Services, ASB Retail and Bankwest Retail. ASB write-off Credit Card and Personal Loans typically around 90 days past due if no agreed repayment plan. 91

92 Regulatory exposure mix Portfolio Regulatory Credit Exposure Mix CBA Peer 1 Peer 2 Peer 3 Residential Mortgages 56% 41% 45% 58% Corporate, SME, Specialised Lending 27% 31% 38% 29% Bank 4% 5% 5% 2% Sovereign 9% 15% 10% 7% Qualifying Revolving 3% 3% 1% 2% Other Retail 1% 5% 1% 2% Total 100% 100% 100% 100% Pillar 3 disclosures for CBA as at June 2017 and Peers as at March Excludes Standardised (including Other Assets, CVA) and Securitisation, which represents 5% of CBA, 6% of Peer 1, 6% of Peer 2 and 5% of Peer 3 before exclusion. 92

93 Sector exposures TCE $bn Exposures by Industry AAA to AA- A+ to A- Other Jun 17 Sovereign Property Banks Finance - Other Retail & Wholesale Trade Agriculture Manufacturing Transport Mining Energy All other excl. Consumer Total Top 20 Commercial Exposures BBB+ to BBB- A- BBB AAA A+ A- BBB+ BBB AA- BBB- A+ A BBB+ A A+ A- A- BBB BBB- A- BBB TCE ,000 1,500 2,000 2,500 $m CBA grades in S&P equivalents. 93

94 Credit exposures by industry Group TCE TIA $m TIA % of TCE Dec 16 Jun 17 Dec 16 Jun 17 Dec 16 Jun 17 Consumer 54.8% 55.4% 1,409 1, % 0.26% Sovereign 9.5% 9.7% Property 6.7% 6.5% % 0.98% Banks 6.3% 6.1% % 0.01% Finance Other 5.1% 5.0% % 0.09% Retail & Wholesale Trade 2.4% 2.2% % 2.00% Agriculture 2.0% 2.0% 1,104 1, % 4.70% Manufacturing 1.6% 1.6% % 2.47% Transport 1.5% 1.5% % 2.65% Mining 1.4% 1.4% % 3.23% Business Services 1.3% 1.3% % 1.13% Energy 1.2% 1.1% % 0.72% Construction 0.8% 0.8% % 3.19% Health & Community Culture & Recreation 0.7% 0.7% % 2.45% 0.7% 0.7% % 0.73% Other 4.0% 4.0% % 1.23% Total 100.0% 100.0% 6,795 6, % 0.60% TCE ($bn) Corporate Portfolio Quality % of book rated investment grade Other BBB A AAA/AA Jun 16 Dec 16 Jun 17 CBA grades in S&P equivalents. Group TCE by Geography Jun 16 Dec 16 Jun 17 Australia 76.7% 76.4% 76.9% New Zealand 9.2% 9.7% 9.7% Europe 5.4% 5.8% 5.5% Other 8.7% 8.1% 7.9% 94

95 TIAs relatively low and stable 0.76% 0.60% % of TCE 0.63% 0.60% $bn Impaired Troublesome Troublesome & Impaired Jun 14 Jun 15 Jun 16 Jun 17 % of book rated investment grade % 69.9% 68.7% 69.2% $bn 6.0 Jun 14 Jun 15 Jun 16 Jun 17 Jun 14 Jun 15 Jun 16 Jun 17 95

96 Mining, oil & gas lower exposure Overview Exposure of $14.7bn (1.4% of Group TCE), $0.2bn reduction on prior half due to ongoing active portfolio management and repayments. Relatively stable performance over the past 12 months: 70% investment grade. Diversified by commodity/customer/region. Focus on quality, low cost projects with strong fundamentals and sponsors. Mining services exposure remains modest (3% of total). Oil and Gas Extraction is the largest sub-sector (58% of total): 77% investment grade with 31% related to LNG typically supported by strong sponsors with significant equity contribution. TIA level reduced to 3.2% of the portfolio General improvement in trading conditions across the Commodity sector. Remain cautious of risk of commodity price pull back. Continued selective approach to new origination TCE ($bn) Group Exposure % of Group TCE % of portfolio % of portfolio Portfolio investment grade graded TIA impaired $m Group Exposure by Sector ($bn) Jun 16 Dec 16 Jun 17 % of portfolio Impaired Jun 16 Dec 16 Jun 17 - Oil & Gas Extraction Metals Mining Iron Ore Mining Gold Ore Mining Mining Services Black Coal Mining Other Mining 96

97 Commercial property lower exposure Overview Exposure has reduced in the half year, though remains diversified across sectors and by counterparties. 86.3% of Commercial Property exposure to investors and REITS, 13.7% to developments (down from 14.7% at the half). Top 20 counterparties primarily investment grade (weighted average rating of BBB equivalent) and account for 14.0% of Commercial property exposure. 33% of the portfolio investment grade, majority of sub-investment grade exposures secured (96%). Impaired exposures remain low (0.2% of the portfolio). Portfolio weighting to NSW increased (up from 52% at the half) driven by Sydney s strong economic, employment and population growth and large percentage reductions in apartment exposures in other states during the half. Development exposure continues to reduce due to repayments from completed projects and active management of risk appetite in areas of concern. Ongoing comprehensive market, exposure and underwriting monitoring on the portfolio TCE ($bn) REIT 16% % of Group TCE Sector Other 13% Retail 24% Group Exposure % of portfolio investment grade Industrial 10% Residential 17% Office 20% % of portfolio graded TIA Profile Portfolio impaired $m Geography SA QLD4% 7% WA 14% VIC 19% Jun 16 Dec 16 Jun 17 % of portfolio Impaired Other 2% NSW 54% Sector profile is Group wide Commercial Property. Geographic profile is domestic Commercial Property. 97

98 Residential apartments weighted to Sydney Overview 1 Profile (Jun 17) Apartment Development exposure reduced $0.7bn (-14%) for the half Facilities being repaid on time from pre-sale settlements Weighting to Sydney increasing as exposures to other capital cities reducing proportionally quicker Qualifying pre-sales of 111.4% 2 Lower Portfolio LVR of 59.0% Sydney developments are diversified across the metropolitan area Ongoing comprehensive market, exposure and settlement monitoring on the portfolio. Total Residential $12.3bn (17% of CP) Investment 35% Other development 29% Apartment development 1 36% ($4.5bn) ($bn) Perth $0.2bn Brisbane $0.3bn Melbourne $0.9bn Exposure Maturity Profile Apartment Development 1 $4.5bn (0.4% of TCE) Other $0.3bn Sydney 61% ($2.8bn) 1. Apartment Developments > $20m. Brisbane, Melbourne and Perth defined as all postcodes within a 15km radius of the capital city and Sydney is all metropolitan Sydney based on location of the development. Other is all other locations. 2. QPS refers to level of Qualifying Pre-Sales accepted as a pre-condition to loan funding. QPS Cover is level of QPS held to cover the exposure

99 Retail trade Overview Exposure of $12.2bn (1.1% of Group TCE), $0.4bn reduction on prior half. Personal and household good retailing accounts for $6.3bn (0.6% of Group TCE) Increased online retailing will present additional challenges; increasing volume and margin competition for both online and instore sales Despite pressures in retail sector, through effective transaction appetite and risk management, portfolio health remains sound TCE ($bn) Group Exposure % of Group TCE % of portfolio % of portfolio Portfolio investment grade graded TIA impaired $m Jun 16 Dec 16 Jun % of portfolio Impaired Personal and Household Good Retailing Jun 16 Dec Jun Group Exposure by Sector ($bn) Jun 16 Dec 16 Jun TCE ($bn) % of Group TCE % of portfolio investment grade % of portfolio graded TIA Portfolio impaired $m % of portfolio Impaired Personal and Household Good Retailing Food Retailing Motor Vehicle Retailing and Services 99

100 Agriculture NZ Dairy portfolio quality improving Overview Exposure of $21.7bn (2.0% of Group TCE) is well diversified by geography, sector and client base. Australian agriculture portfolio performing well. NZ dairy portfolio: Represents 0.7% of Group TCE. Improvement in milk prices is leading to a reduction in TIA levels. Outlook is dependent on improved milk prices being sustained TCE ($bn) % of Group TCE NZ Dairy Exposure % of portfolio investment grade % of portfolio graded TIA New Zealand dairy exposure (AUD) included in Group exposure Portfolio impaired $m Jun 16 Dec 16 Jun 17 % of portfolio Impaired TCE ($bn) Dairy Farming % of Group TCE Group Exposure % of portfolio investment grade % of portfolio graded TIA Portfolio impaired $m Group Exposure by Sector ($bn) Sheep and Grain Growing Beef Farming Forestry, Fishing and Services Horticulture and Other Crops Jun 16 Dec 16 Jun % of portfolio Impaired Jun 16 Dec 16 Jun 17 Other Livestock 100

101 Capital, Funding & Liquidity

102 Capital drivers 9.9% (67) 114 Capital CET1 (APRA) (23) (3) (34) % Dec 16 APRA Dividends (Net of DRP) Cash NPAT Underlying Credit RWA Total Risk Weighted Assets IRRBB RWA Market RWA Colonial Debt Other APRA Mortgages Changes Other Regulatory Treatments Credit Risk Weighted Assets Jun 17 APRA $bn 3.8 (1.1) (2.1) $bn (3.5) 1.8 (5.7) Underlying +18 (1.5) (2.3) CET1 impact bpts (8) (1) CET1 impact bpts (34) 8 (4) (8) Dec 16 Credit Risk Traded Market Risk IRRBB Operational Risk Jun 17 Dec 16 APRA Other Volume Quality FX Data Jun 17 Mortgage Regulatory Changes Treatments Basis points contribution to change in APRA CET1 ratio. 102

103 Australia Hong Kong Sweden Norway Spain France Germany Singapore United Kingdom Finland Canada Residential mortgage risk weights Residential mortgage risk weights by country 25% 25% 25% 22% 17% 16% 16% Group IRB residential mortgage risk weights Includes Australian performing residential mortgages at 25.25% % 12% 11% 10% 16.3% 16.1% 7% Jun 15 Jun 16 Jun 17 Pillar 3: Risk Weighted Assets/Exposure at Default Source: Fourth report on the consistency of risk weighted assets, European Banking Authority, 11 June The Hong Kong regulator has applied a risk-weight floor of 25% (previously 15%) to new Hong Kong residential mortgages granted from May The Swedish regulator has imposed a risk weight floor for Swedish mortgages of 25%, which is implemented as a Pillar 2 charge 3. Sourced from public disclosures of major banks in those countries 4. APRA has applied a risk-weight minimum of 25% (allowing for a Basel expected loss adjustment) on performing Australian IRB residential mortgages. CBA meets this requirement. 103

104 Interest rate risk in the banking book bpts Optionality Risk Basis Risk 1, , ,880 1,712 Optionality Risk Basis Risk Repricing & Yield Curve Risk Repricing & Yield Curve Risk $m Embedded Gain (offset to capital) Embedded Gain (offset to capital) Jun 14 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Capital ($1.7bn) assigned to interest rate risk in banking book per APS117. Bpts (basis points) of APRA CET1 ratio. 104

105 Dividends over time Payout ratio (cash) 74.2% 75.0% 78.2% 73.9% 73.2% 75.8% 75.9% 75.1% 75.2% % 75.0% 61% 88% 63% 87% 63% 84% 74% 84% 62% 84% 62% 90% 71% 81% 81% 82% 81% 70% 71% 70% 70% 80% cents FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Interim Final 1. Comparative information has been restated to conform to presentation in the current period. 105

106 International CET1 ratios 20.0 G-SIBs in dark grey APRA top quartile Nordea CBA WBC ANZ HSBC ING NAB Deutsche RBS Standard Chartered Lloyds 3 UBS Intesa Sanpaolo 3 3 Credit Suisse 3 Barclays Citi China Construct. Bank ICBC UniCredit Credit Agricole SA JP Morgan Sumitomo Mitsui China Merchants Bank BNP Paribas SocGen 3 3 Mitsubishi UFJ Wells Fargo Bank of America Mizuho Scotiabank BBVA 3 Bank of China Bank of Comm. Toronto Dominion Santander RBC Agri. Bank of China Source: Morgan Stanley and CBA. Based on last reported CET1 ratios up to 3 August 2017 assuming Basel III capital reforms fully implemented. Peer group comprises listed commercial banks with total assets in excess of A$750 billion and which have disclosed fully implemented Basel III ratios or provided sufficient disclosure for a Morgan Stanley estimate. 1. APRA has estimated that the 75% percentile is likely to be in the order of 14 per cent as at end December APRA Information Paper Strengthening banking system resilience establishing unquestionably strong capital ratios (19 July 2017) 2. Domestic peer figures as at 31 March Deduction for accrued expected future dividends added back for comparability 106

107 APRA and International comparison The following table provides details on the differences, as at 30 June 2017, between the APRA Basel III capital requirements and internationally comparable capital ratio 1. CET1 APRA 10.1% Equity investments Balances below prescribed threshold are risk weighted, compared to a 100% CET1 deduction under APRA s requirements. 0.9% Capitalised expenses Balances are risk weighted, compared to a 100% CET1 deduction under APRA s requirements. 0.1% Deferred tax assets Balances below prescribed threshold are risk weighted, compared to a 100% CET1 deduction under APRA s requirements. 0.3% IRRBB RWA APRA requires capital to be held for Interest Rate Risk in the Banking Book (IRRBB). The BCBS does not have any capital requirement. 0.5% Residential mortgages Loss Given Default (LGD) of 15%, compared to the 20% LGD floor under APRA s requirements and adjustments for higher correlation factor applied by APRA for Australian residential mortgages. Other retail standardised exposures Risk-weighting of 75%, rather than 100% under APRA s requirements. 0.1% Unsecured non-retail exposures LGD of 45%, compared to the 60% or higher LGD under APRA s requirements. 0.5% Non-retail undrawn commitments Credit conversion factor of 75%, compared to 100% under APRA s requirements. 0.4% 1.8% Specialised lending Use of AIRB probabilities of default (PD) and LGDs for income producing real estate and project finance exposures, reduced by application of a scaling factor of APRA applies higher risk weights under a supervisory slotting approach, but does not require the application of the scaling factor. 0.8% Currency conversion Increase in the A$ equivalent concessional threshold level for small business retail and small/medium enterprise corporate exposures. Total adjustments 5.5% CET1 Internationally Comparable 15.6% Tier 1 Internationally Comparable 18.0% Total Capital Internationally Comparable 20.4% 0.1% 1. Analysis aligns with the APRA study entitled International capital comparison study (13 July 2015) 107

108 CET1 Internationally comparable (bpts) Internationally Comparable 1 CET1 impacted by APRA increase in risk weights for Australian residential mortgages implemented effective 30 June % (89) (10) 6 (70) 15.6% Dec 16 Int'l Dec 16 Interim Dividend (Net of DRP) Cash NPAT Underlying Credit RWA Market RWA Colonial Debt Other Mortgage Model Change Jun 17 Int'l 1. Internationally comparable capital - refer glossary for definition 108

109 Regulatory expected loss $m Jun 16 Dec 16 Jun 17 Regulatory Expected Loss (EL) 4,430 4,698 4,736 Eligible Provisions (EP) Collective Provisions 1 2,562 2,561 2,486 Specific Provisions 1,2 1,801 1,900 1,856 General Reserve for Credit Losses adjustment Less: ineligible provisions (standardised portfolio) (609) (268) (257) Total Eligible Provisions 4,306 4,725 4,674 Regulatory EL in Excess of EP 124 (27) 62 Common Equity Tier 1 Adjustment Includes transfer from collective provision to specific provisions (Jun 17: $261m, Dec 16: $246m, Jun 16: $256m). 2. Specific provisions includes partial write offs (Jun 17: $615m, Dec 16: $637m, Jun 16: $601m). 3. Excess of eligible provisions compared to expected loss for defaulted exposures (Jun 17: $156m, Dec 16: $247m, Jun 16: $190m), not available to reduce the shortfall for non-defaulted exposures. 109

110 Leverage ratio above Basel minimum CBA Leverage Ratio well above prescribed Basel Committee minimum Leverage ratio introduced to constrain the build-up of leverage in the banking system. Scheduled to be introduced as a minimum requirement from 1 January Leverage ratio = Tier 1 Capital Total Exposures $m Jun 17 Tier 1 Capital 52,684 Total Exposures 1,027,958 Leverage Ratio (APRA) 5.1% $m Jun % 5.5% 5.0% 4.9% 5.1% 5.8% Group Total Assets 976,374 Less subsidiaries outside the scope of regulatory consolidations (17,362) Basel Committee minimum 3% Add net derivative adjustment 489 Add securities financing transactions 1,617 Less asset amounts deducted from Tier 1 Capital (19,261) Jun 16 Dec 16 APRA Int'l Jun 17 Add off balance sheet exposures 86,101 Total Exposures 1,027,958 The Tier 1 capital included in the calculation of the internationally comparable leverage ratio aligns with the 13 July 2015 APRA study entitled international capital comparison study, and includes Basel III non-compliant Tier 1 instruments that are currently subject to transitional rules. 110

111 Capital conservation buffer (CCB) 1 The Australian major banks are Domestic Systemically Important Banks (D-SIBs). From 1 January 2016, D-SIBs are required to hold 1% additional capital in the form of CET1 (called the D-SIB buffer). The Countercyclical Capital Buffer (CCyB), which was also effective from 1 January 2016, currently has no material impact on the Group 2. Both the D-SIB and CCyB form part of the CCB. From 1 January 2016, if a bank s CET1 ratio falls within the CCB, they may be restricted from making discretionary payments such as dividends, hybrid Tier 1 distributions and bonuses 1. Above example assumes the total CCB (including the D-SIB buffer of 1% and CCyB of 0%) is 3.5%. 2. In January 2017, APRA announced that the CCyB for Australian exposures will remain at 0%. The Group has limited exposures to those offshore jurisdictions in which a CCyB in excess of 0% has been imposed % minimum plus any additional amount required by APRA. CET1 ratio Value range % of earnings able to be used for discretionary payments Above top of CCB Greater than PCR + 3.5% 100% 4 th Quartile 3 rd Quartile 2 nd Quartile 1 st Quartile Top of range: PCR + 3.5% Bottom of range: greater than PCR % Top of range: PCR % Bottom of range: greater than PCR % Top of range: PCR % Bottom of range: greater than PCR % Top of range: PCR % Bottom of range: PCR 60% 40% 20% Prudential capital requirement (PCR) 3 Less than PCR 0% 0% 111

112 Replicating portfolio Actual and Forecast Scenario Replicating Portfolio Yield Official Cash Rate 2002 Jun 02 Jun 03 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 12 Jun 13 Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Replicating portfolio provides partial economic hedge for certain liabilities and assets that display imperfect correlation between the cash rate and the product interest rate 112

113 Funding overview $bn New 5.2 yrs Portfolio 4.1 yrs Source of funds NSFR 107% 12 months to June 2017 Core Funding Gap ($8bn) Use of funds 43 (29) 67% Deposit Funded 43 (35) LCR 129% (4) (2) (18) 3 (1) Equity Long Term Issuances 1 Long Term Maturities Short Term Funding Collateral Deposits Customer Deposits Lending HQLA Assets Other Assets 1. Reported at historical FX rates 113

114 Deposit funding Deposits vs Peers 1 June 2017 ($bn) 160 Deposits in LCR calculation 2 As at 31 March 2017 ($bn) CBA overweight more stable deposits CBA Peer 1 Peer 2 Peer 3 Other deposits Household deposits CBA Peer 3 Peer 2 Peer 1 - Retail / SME Retail / SME Retail / SME Stable Less stable High runoff All Operational accounts Corp/Gov Non Operational FI Non Operational 5% 10% 25% 25% 40% 100% 30 day Net Cash Outflow assumptions 3 1. Source: APRA. Total deposits (excluding CD s). CBA includes Bankwest. 2. Source: 30 June 2017 Pillar 3 Regulatory Disclosure for 31 March Peer comparisons are calculated from disclosures assuming there are not material balances in the notice period deposits that have been called and the fully insured non-operational deposits categories. 114

115 Deposit funding transactions Group Transaction Balances % Growth across divisions FY17 v FY16 103, , , % 17.9% Group 12.7% $m 1.7% 4.9% 3.7% FY15 FY16 FY17 RBS BPB IB&M 2 BWA NZ 3 RBS New Transaction Accounts 4 # % 235,446 Retail Deposit Mix +5.7% 248, ,070 1,174 43,422 55,146 65,237 66,127 Transactions 1 Online % 126, ,642 Savings & Investments $m FY15 FY16 FY17 Jun 16 Jun Includes non-interest bearing deposits 2. Includes pooling facilities 3. In NZD 4. Number of new RBS personal transaction accounts, including offset accounts 5. Online includes NetBank Saver, Goal Saver and Business Online Saver 115

116 Funding costs vs cash rate RBA cash rate and lending rates track similar though not identical path - reflecting global markets Spread between funding costs and lending rates narrowed as not all funding costs are passed on 116

117 Wholesale Funding overview Funding composition Wholesale Funding by product Vanilla MTN CDs Covered Bonds FI Deposits Debt Capital Securitisation Structured MTN Other Customer Deposits ST Wholesale Funding LT Wholesale Funding > 12 months LT Wholesale Funding 12 months CP Covered Bonds 2% Hybrids Short Term Collateral Deposits RMBS 5% 5% 7% 1 9% 3% 3% 2% 1% 1% 11% 11% 13% 10% 16% 67% 34% Jun 07 Jun 09 Jun 11 Jun 13 Jun 15 Jun Average long term funding costs Margin to BBSW (bpts) Portfolio Run-off Indicative Funding Costs Indicative funding cost curves Margin to BBSW (bpts) Predicted LT funding costs if current market rates remain unchanged year 2 year 3 year 4 year 5 year Jun 07 Jun 16 Jun Includes the categories central bank deposits and due to other financial institutions (including collateral received) 2. Includes restructure of swaps and reclassification of deals between short and long term funding

118 Wholesale Funding portfolio $bn Issuance Term Wholesale Funding profile issuance and maturity Maturity Weighted average maturity 4.1 years Jun 14 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 22 Jun 23 > Jun 23 Long Term Wholesale Debt Covered Bond Securitisation Term Wholesale Funding by Currency 1 Jun 17 Jun 16 Jun 15 Jun 14 0% 20% 40% 60% 80% 100% AUD USD EUR Other Date Type Currency Size (m) Tenor (yrs) Spread (bps) Jul 16 Senior AUD 2, m BBSW+121 Jul 16 Covered Bond EUR 1, MS +20 Aug 16 Senior USD 3,300 2, 5, 10 T+65, 85, 110 Oct 16 Tier 2 USD T+210 Oct 16 Senior USD 1,000 / T+80 / USDL+64 Nov 16 Covered Bond AUD 2,300 5, 10 3mth BBSW +85 / +102 Dec 16 RMBS AUD 1, m BBSW Jan 17 Senior AUD 2, m BBSW +111 Mar 17 Senior USD 1,500 / 1,500 3, 5 T+72 / +80 USDL +45 / 70 Mar 17 Climate bond AUD m BBSW +92 Apr 17 Senior EUR MS +32 Apr 17 Covered Bond EUR MS +6 Jun 17 RMBS AUD 2, m BBSW Includes debt with an original maturity or call date of greater than 12 months (including loan capital) 118

119 Liquidity Coverage Ratio (LCR) LCR 129% at 30 Jun 2017 Committed Liquidity Facility reduced by $10.2bn on 1 Jan 2017 to $48.3bn The Group s Net Stable Funding Ratio (NSFR) is 107% 120% 135% 129% Net Cash Outflows Other Wholesale funding Customer deposits $bn CLF CLF $58.5bn $58.5bn Liquid Assets CLF $48.3bn Cash, Gov, Semis Repo-eligible Internal RMBS Net Cash Outflow Liquid Assets Net Cash Outflow Liquid Assets Net Cash Outflow Liquid Assets Jun-16 Dec-16 Jun

120 Balance sheet comparisons 1,2 UK USA Australia Assets Liab + Equity Assets Liab + Equity Assets Liab + Equity 9% 8% 4% 13% 11% 7% 21% 13% 51% 58% 59% 63% 38% 38% Comparison Assets CBA has a safe, conservative asset profile: 51% of balance sheet is home loans, which are stable/long term. Trading securities and other fair value assets comprise just 14% of CBA balance sheet compared to 26% and 27% for UK and US banks respectively. CBA s balance sheet is less volatile due to a lower proportion of fair value assets. Assets 4 Amortised cost Fair Value 15% 11% 8% 12% 10% 6% 4% Based on an average of Lloyds, RBS, HSBC and Barclays as at 31 Dec 16. Cash & equivalents Home Loans 17% 10% 9% 10% 10% 6% 4% Based on an average of Citigroup, JP Morgan, Bank of America and Wells Fargo as at 31 Mar 17. Other Lending Long Term 3 Other Fair Value Assets Short Term 3 Other Liabilities Trading Securities Trading Liabilities Other Assets 28% 9% 5% 3% Equity Deposits 17% 10% 3% CBA balance sheet as at 31 December Balance sheet does not include derivative assets and liabilities. Based on statutory balance sheet. CBA 83% 17% UK 43% 57% US 54% 46% Funding CBA has a secure, sustainable low risk funding profile: CBA has a higher proportion of long term wholesale funding than US and UK banks. This means CBA has lower dependence on wholesale funding markets in any given period compared to US and UK banks. 1. Based on statutory balance sheets. 2. Balance sheets do not include derivative assets and liabilities. 3. Wholesale funding 4. Includes grossed up derivatives 120

121 Regulatory change timetable APRA Financial System Inquiry Competition Increase in mortgage risk weights Unquestionably strong 1 ADIs to target unquestionably strong capital ratios, which will also cover Basel IV proposals. Discussion papers, draft prudential standards released for consultation Release of final prudential standards Implementation Leverage ratio Securitisation Counterparty Credit Risk Disclosure requirements only Implementation Implementation Implementation Basel Committee Standardised & Advanced Credit Risk Capital floors Standardised Operational Risk Market Risk Basel IV BCBS expected to finalise APRA will finalise with Unquestionably strong Implementation to be advised Implementation to be advised Implementation to be advised Implementation 2 IRRBB NSFR Finalised Jan 2016 Finalised Apr 2016 Additional disclosures from 2018 Implementation IFRS 9 Provisioning Implementation 1. APRA Information Paper Strengthening banking system resilience establishing unquestionably strong capital ratios (19 July 2017). 2. APRA advised in March 2017 that finalisation for Australian regulatory purposes not expected until beginning of 2020 at the earliest, with implementation 12 months after the regulations have been finalised. 121

122 Economic Overview